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London open: Stocks slide on weak US cues; UK GDP in focus
London stocks slid at the open on Thursday, taking their cue from a weak session on Wall Street, as investors mulled uninspiring UK GDP figures.
At 0850 BST, the FTSE 100 was down 1.8% at 7,213.37.
Victoria Scholar, head of investment at Interactive Investor, said: “Risk-off sentiment is gripping European markets, which have opened sharply lower dragged down by the tech-driven sell-off on Wall Street last night after US inflation data came in hotter than expected. All European sectors are in the red this morning with basic resources leading the declines.
“The FTSE 100 has opened sharply lower down by almost 2% within a whisper of breaking below support at 7,200 with miners like Glencore, Antofagasta and Anglo American towards the bottom of the index”
Data out earlier from the Office for National Statistics showed the UK economy contracted in March amid rising prices following no growth the month before.
GDP shrank by 0.1% versus expectations for no change, leaving the economy just 1.2% above its pre-Covid level. The data showed that the main contributor to the monthly decline was a 0.2% contraction in the services sector.
February’s GDP was revised down to no growth from an initial estimate of 0.1% growth.
During the first three months of the year, growth slowed to 0.8% from 1.3% in the previous quarter, versus expectations for 1% growth. This marked the lowest quarterly growth in a year.
Darren Morgan, ONS director of Economic Statistics, said: “The UK economy grew for the fourth consecutive quarter and is now clearly above pre-pandemic levels, although growth in the latest three months was the lowest for a year.
“This was driven by growth in a number of service sectors as the economy continued to recover from Covid-19 effects, including hospitality, transport, employment agencies and travel agencies. There was also strong growth in IT.
“There were, though, some downward effects from other services, including retailing, wholesaling and car sales and also health, due to continuing decreases in the Test and Trace service and vaccination programmes.
“Our latest monthly estimates show GDP fell a little in March, with drops in both services and in production. Construction, though, saw a strong month thanks partly to repair work after the February storms.”
Paul Dales, chief UK economist at Capital Economics, said: “The risk of recession has just risen, although strong price pressures will probably mean the Bank of England will raise interest rates further.”
In equity markets, Hargreaves Lansdown was the worst performer on the FTSE 100 after it reported a drop in new business and new client numbers for the four months to 30 April.
Food producer Cranswick fell sharply following reports that a number of retailers including Aldi and Sainsbury’s had recalled its food-to-go products containing chicken due to concerns about salmonella contamination.
On the upside, BT rallied as the telecoms and broadcasting group said it was moving its sports TV division into a 50-50 joint venture with Warner Bros Discovery and reported a small rise in adjusted annual core earnings after revenue fell 2%.
Retailer JD Sports gained as it said like-for-like sales were more than 5% higher year-on-year, driven by both the “strength and breadth” of its brand relationships and category offerings.
Engine maker Rolls-Royce rose it said it continues to trade in line with expectations and that it expects low double-digit percentage underlying revenue growth in the civil aerospace business. It also backed its 2022 guidance
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | +1.74% | +4.00 | 233.40 |
| 2 |  |
Bt Group Plc | +1.47% | +2.60 | 179.05 |
| 3 |  |
Compass Group Plc | +1.24% | +21.00 | 1,715.00 |
| 4 |  |
Coca-cola Hbc Ag | +1.13% | +18.00 | 1,616.00 |
| 5 |  |
Associated British Foods Plc | +0.65% | +10.50 | 1,618.50 |
| 6 |  |
Rightmove Plc | +0.44% | +2.40 | 550.60 |
| 7 |  |
Next Plc | +0.23% | +14.00 | 6,228.00 |
| 8 |  |
Unilever Plc | +0.19% | +7.00 | 3,697.50 |
| 9 |  |
Morrison (wm) Supermarkets Plc | +0.00% | +0.00 | 286.40 |
| 10 |  |
Evraz Plc | +0.00% | +0.00 | 82.68 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Antofagasta Plc | -6.52% | -91.50 | 1,311.00 |
| 2 |  |
Hargreaves Lansdown Plc | -6.47% | -57.80 | 836.20 |
| 3 |  |
Ocado Group Plc | -6.31% | -48.20 | 716.00 |
| 4 |  |
Scottish Mortgage Investment Trust Plc | -6.20% | -48.40 | 732.40 |
| 5 |  |
Fresnillo Plc | -5.46% | -42.20 | 731.00 |
| 6 |  |
Glencore Plc | -5.41% | -25.75 | 450.25 |
| 7 |  |
Carnival Plc | -5.31% | -57.00 | 1,016.50 |
| 8 |  |
Anglo American Plc | -5.08% | -172.50 | 3,225.00 |
| 9 |  |
Segro Plc | -4.82% | -53.50 | 1,057.50 |
| 10 |  |
Rio Tinto Plc | -4.69% | -251.00 | 5,106.00 |
US close: Stocks reverse gains to end another day weaker
Wall Street indices reversed their earlier gains to close weaker on Wednesday, after fresh data showed growth in America’s cost of living fell in April, but not as much as had been expected.
At the close the Dow Jones Industrial Average was down 1.02% at 31,834.11, as the S&P 500 lost 1.65% to 3,935.18 and the Nasdaq Composite tumbled 3.18% to 11,364.24.
The Dow closed 326.63 points lower on Wednesday, adding to the losses recorded in what was a mixed session for major indices on Tuesday.
“Inflation has been a hot topic lately as there are growing concerns about a cost-of-living crisis,” said Equiti Capital market analyst David Madden.
“The US CPI report boosted volatility in the markets as fears briefly ticked up the Fed might look to continue down the path of aggressively hiking rates.”
Madden said traders were “spooked” by the fact that both reports topped forecasts, meaning the Fed might look at another 50-basis point hike in the coming months.
“Immediately after the numbers, US index futures swung from positive territory to lower on the day, and European markets lost a lot of the gains they had made.”
Wednesday’s primary focus was news that growth in the cost of living in the US dipped in April, but not by as much as anticipated amid continued rises in food prices throughout the month.
According to the Department of Labor, in seasonally adjusted terms the annual rate of headline consumer price inflation slipped from 8.5% in March to 8.3% for April.
However, in month-on-month terms, CPI rose by 0.3% after jumping by 1.2% during March.
In other macro headlines, US mortgage applications rose 2% in the week ended 6 May, according to the Mortgage Bankers Association of America, up from the previous week’s 2.5% increase.
On the corporate front, burger and baked potato chain The Wendy’s Company plunged 11.22% after the company reported both earnings and revenues that fell short of Wall Street estimates.
Streaming giant Netflix was off 6.35% after the New York Times reported on the firm’s plans to launch an advertising-supported package and restrict password sharing, amid backlash to its latest round of price rises.
On the upside, Krispy Kreme was ahead 2.77% after the donut baker beat expectations on both revenue and profit and reiterated its outlook for the full year.
Perrigo was also in the green, rising 2.94% even after the generic pharmaceuticals producer missed expectations by swinging to a loss in the first quarter.
Thursday newspaper round-up: Tesco, Didi, Saudi Aramco, BlackRock
Client meetings and emails could be picked up alongside a pint of milk and a box of eggs under a new deal between Tesco and flexible office operator IWG. From later this month, the owner of office operator Regus is to test out a 3,800 sq ft flexible working area within Tesco’s New Malden supermarket, with room for 12 private desks, 30 co-working spaces and a meeting room. – Guardian
Chinese taxi app Didi has told staff it has put plans for major international expansions on hold until at least 2025 and cut half its UK employees amid pressure from Beijing on one of its most prominent tech companies. Didi Chuxing has been on the back foot since last summer when the Cyberspace Administration of China, a powerful regulator, banned the country’s dominant ride-hailing company from listing its app on mobile app stores in the country. – Guardian
Saudi Aramco has overtaken Apple as the world’s most valuable company after oil prices surged and inflation hammered technology stocks. Aramco traded near its highest level on record on Wednesday, reaching a market capitalisation of about $2.4 trillion (£1.9 trillion) and surpassing that of Apple for the first time since 2020. – Telegraph
BlackRock has warned it will vote against most shareholder green activism this year for being too extreme, in a significant u-turn by the world’s biggest money manager. The company said it was concerned about proposals to stop financing fossil fuel companies, including forcing them to decommission assets and setting absolute targets for reducing emissions in their supply chains. – Telegraph
The administrators to Debenhams have made £5.3 million in fees in the two years since the department store chain filed for insolvency. FRP Advisory was appointed to Debenhams in April 2020 after the retailer went bankrupt for a second time, shortly after lockdowns forced the closure of its stores. It oversaw the sale of the 200-year-old department store’s brand and website to Boohoo for £55 million last January. – The Times
